The Santa Cruz City Council in May 2024. (Marcello Hutchinson-Trujillo — Santa Cruz Local file)

Santa Cruz City Council meeting

  • 12:45 p.m. Tuesday, Jan. 28.
  • Online and at 809 Center St., Santa Cruz.

SANTA CRUZ >> As a lawsuit from a Santa Cruz landlord works its way through federal court, the Santa Cruz City Council is set to consider amending its rules on rent increases.

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State law limits rent increases for most housing, but doesn’t cover homes with expiring deed restrictions for below-market rent. In September 2024, the city council approved a local rule that extends restrictions on rent increases to those properties, including St. George Residences at 833 Front St. in Santa Cruz.

In November, the company that owns St. George sued the city on the grounds that the local law violated the company’s right to make a fair return on investment in the property. A court date for the lawsuit has not been set. 

At its Jan. 28 city council meeting, city council members are set to consider a change to let landlords request increases beyond the local limits if they otherwise wouldn’t make reasonable profit.

“A fair return must be high enough to encourage good management, reward efficiency, discourage the flight of capital, and enable operators to maintain their credit,” a city staff report stated.

The proposed process would allow landlords to petition for an exception to the local rental increase restrictions on expiring deed-restricted below-market-rate housing, such as St. George. 

  • An officer appointed by a city staff member would consider the petition, supporting financial documents, and arguments from opponents of the rent increase. 
  • The officer’s decision whether to grant the exception would be appealable to the Santa Cruz Planning Commission.
  • Landlords can only include necessary expenses, like maintenance and property taxes, as rationale for rent increases. Renovation costs are considered only if necessary to comply with health and safety regulations. 
  • The landlord would pay for the staff’s time used on the petition process. If the hearing grants the landlord the requested rent increase, half the cost would be refunded. 

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Reporter / California Local News Fellow |  + posts

Jesse Kathan is a staff reporter for Santa Cruz Local through the California Local News Fellowship. They hold a master's degree in science communications from UC Santa Cruz.